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"I purchased new energy vehicle insurance when I bought a car last year. Now the commercial insurance is about to expire, and the car insurance premium is three times higher than the price of the commercial insurance I bought in the first year." "My beloved car was insured once in the first year. Although the premium did not fluctuate in the second year, it has skyrocketed in the third year now." ... Beijing Business Daily reporters noticed that since the beginning of this year, complaints about the rising premiums of new energy vehicle insurance have frequently appeared.

Since 2022, property and casualty insurance companies have begun to publish their average premium data per vehicle, allowing the market to further understand the "various forms" of auto insurance prices. On August 8, according to incomplete statistics from Beijing Business Daily reporters, in the second quarter of this year, the average premium per vehicle of 50 property and casualty insurance companies showed a clear upward trend compared with the first quarter. Specifically, among the 50 property and casualty insurance companies that released relevant data, 42 had a month-on-month increase in premiums, accounting for about 84%. In addition, from less than 1,000 yuan to more than 6,000 yuan, there are also significant differences in the average premium per vehicle of some companies.

As policies related to auto insurance pricing are released one after another, what new changes will the average car insurance premium see in the future? What factors will determine whether the average car insurance premium will increase or decrease in the future?

The average car insurance premium in the second quarter increased "largely"

Beijing Business Daily reporters found through statistics of the second quarter solvency reports and previous solvency reports recently released by property and casualty insurance companies that as of now, a total of 50 property and casualty insurance companies have disclosed the average auto insurance premium data for the first half of this year and the first half of last year.

Data shows that in the first half of this year, the average premium per vehicle of 28 property and casualty insurance companies decreased compared with the same period last year, accounting for about 56%; the average premium per vehicle of 22 property and casualty insurance companies increased compared with the same period last year.

Focusing on the first half of this year, the average premium per car in the second quarter of this year has increased significantly compared with the first quarter. Among the 50 property and casualty insurance companies, 42 companies saw an increase in premiums in the second quarter, accounting for about 84%. Among them, Hezhong Property and Casualty Insurance saw a more significant increase of more than 50%. The company's average premium per car in the second quarter increased by 53.79% month-on-month.

Regarding the large-scale month-on-month increase in per-vehicle premiums of property and casualty insurance companies in the second quarter, Liu Chunsheng, an associate professor at the Central University of Finance and Economics, said that the reasons include rising claims costs, especially the high claims costs for new energy vehicles. Insurance companies may have adjusted their premium pricing strategies based on the latest risk assessment models to more accurately reflect the risk levels of vehicles and drivers.

"Recently, the expansion of the new energy vehicle market has brought about adjustments in risk structure, rising claims ratios, and the insurance industry's dynamic adjustments to the pricing mechanism for new energy vehicle insurance. These have jointly contributed to a significant increase in average vehicle premiums in the second quarter compared to the first quarter." Zhi Peiyuan, a corporate mentor for master's students at the School of Management of China University of Mining and Technology (Beijing), also said that the unique maintenance and battery replacement costs of new energy vehicles, coupled with the risk premium brought about by technological uncertainty, have prompted insurance companies to adopt more prudent pricing strategies, thereby pushing up premium levels.

While the average premium per vehicle has risen and fallen, the range of average premium per vehicle is also different. Specifically, in the first half of this year, 29 property and casualty insurance companies had average premiums between 1,000 and 2,000 yuan per vehicle, accounting for about 58%. Average premiums of 2,000 to 3,000 yuan and below 1,000 yuan also accounted for a certain proportion, with 10 and 6 companies respectively. It is not uncommon for property and casualty insurance companies to have average premiums exceeding 3,000 yuan or even 6,000 yuan per vehicle. For example, the average premiums per vehicle of Hyundai Property and Casualty Insurance and Nippon Property and Casualty Insurance in the first half of this year were 6,100 yuan and 7,230.21 yuan respectively.

The significant differences in average premiums per vehicle among different insurance companies can be attributed to the heterogeneity of their respective customer structures, differences in risk preferences, diversity of pricing strategies, and positioning and participation in the new energy vehicle insurance market. Zhi Peiyuan said that some companies may face higher average premiums due to underwriting high-risk models or specific market segments, while others may achieve relatively low average premiums by implementing precise pricing, strengthening risk management, and using big data analysis technology.

Beijing Business Daily reporter noted that some insurance companies said that since this year, they have continuously focused on the development of business value in the management of auto insurance business. Among the measures, the strategic upgrade of auto insurance has achieved comprehensive development, and the premiums of all business for family car owners and the average premium of family cars have continued to increase. The quality of business has been continuously improved, and the quality of business underwriting has been improved by promoting the development of benefit insurance products. The proportion of high-insurance three types of family cars and accompanying vehicles has continued to increase. In terms of resource allocation, the application of net rate differentiation has been further deepened, and the direction of resource allocation has been continuously adjusted to improve business quality.

Premium reduction requires further technological development

In the first half of this year, topics about rising auto insurance premiums frequently dominated the list, with new energy auto insurance being the main focus in most of them.

It is worth noting that data shows that in 2023, the average premium for new energy vehicle insurance will exceed 4,000 yuan, while the average premium for traditional fuel vehicles will be about 2,209 yuan, the former is about 1.8 times the latter.

Behind the widespread attention paid to new energy vehicle insurance premiums, for insurance companies, the relevant business is still in the operational adjustment period. The high claims ratio caused by the high accident rate and high repair costs is the main operating pressure faced by insurance companies.

The increase or decrease of the average premium per vehicle will be mainly subject to multi-dimensional factors such as the impact of technological progress on the maintenance cost of new energy vehicles, the optimization of the pricing mechanism of the insurance industry, the guidance of regulatory policies, the evolution of the market competition pattern and changes in consumer behavior. Liu Chunsheng said that the policy orientation of the government and regulatory authorities has an important impact on the auto insurance market, such as the deepening of comprehensive auto insurance premium reform and regulatory guidance. Changes in the market competition pattern will directly affect the pricing strategy of insurance companies, and thus affect the premium level. Factors such as vehicle accident rate and the severity of accident losses will directly affect the compensation costs of insurance companies, and thus affect premium pricing.

It is worth mentioning that the Financial Supervision Administration issued the "Notice on Promoting the High-quality Development of New Energy Vehicle Insurance (Draft for Comments)" (hereinafter referred to as the "Draft for Comments") in April, and publicly solicited opinions from property insurance companies, insurance associations, etc. A series of measures have been proposed to expand the scope of autonomous pricing coefficients, study and launch a "basic + variable" combination, and encourage insurance companies to improve the digitalization level of new energy vehicle insurance operations. It aims to promote cost reduction and efficiency improvement of new energy vehicle insurance and improve the level of protection. In the view of industry insiders, this policy aims to solve the problems of expensive premiums and difficult renewals, and to make new energy vehicle insurance "one person, one car, one price" through the efforts of technology.

Liu Chunsheng said that based on the Draft for Comments and the current efforts of the industry to optimize pricing and cost structure, it is expected that the premiums of new energy vehicle insurance will gradually become reasonable, and the gap with traditional commercial vehicle insurance will be narrowed. Further, insurance companies' improvement of the digitalization of new energy vehicle insurance operations will help to more accurately assess risks and optimize pricing strategies, thereby reducing compensation costs and premium levels.

"The relevant policies issued by the regulators are aimed at deepening the synergy between the insurance industry and the new energy vehicle industry by promoting the high-quality development of new energy vehicle insurance." Zhi Peiyuan also said that technological progress, especially the application of big data and artificial intelligence, will enable the insurance industry to conduct more accurate risk assessments and provide personalized insurance solutions, which is expected to achieve effective control of premium costs and improve the effectiveness of protection. In view of the dual drive of policy guidance and technological progress, it is expected that the average premium per vehicle for new energy vehicle insurance will gradually tend to be rationalized, and the gap between it and traditional commercial vehicle insurance is expected to narrow. In addition, technological maturity and market maturity will jointly promote the accuracy of maintenance costs and risk assessments, and the insurance industry will have more accurate pricing, thereby achieving a stable or even moderate decline in premiums. In addition, the intensification of market competition will encourage insurance companies to reduce operating costs and further promote the optimization of average premium per vehicle by innovating products, optimizing services and improving operational efficiency.

Beijing Business Daily reporter Hu Yongxin